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Interest Rate Rise – The Impact Upon Motor Retailing PDF Print E-mail
Monday, 06 November 2017
“The 0.25% interest rate announced by the Bank of England may be modest and still sees interest rates at exceptionally low levels, but it changes the mood-music for lenders and consumers, many of whom will never have seen rates increase.”    

This is the view from Abe Smith, CEO & Founder of financial technology experts Dealflo. He sees the increase as creating a new tone in a financial services market that has grown strongly over recent years; adding;

“With the Bank of England signaling the potential for further rises, we expect to see lenders become more risk averse in their underwriting and consumers becoming more cautious in their spending plans. This is exactly what the Bank would hope to achieve.”

As well as the changes in buyer and lender behaviours, Smith anticipates the increase in arrears that anecdotally is already emerging gaining momentum. Alongside this, there is the inevitable exposure to accusations of mis-selling. It is something Smith urges dealers and financers to mitigate concluding:

“The rate rise carries an inherent risk that people who find themselves over-committed financially may seek to mitigate their situation by pointing to poor sales practices and claims of mis-selling. In a motor market that is itself slowing, dealers and lenders need to look again at their agreement processes and technology, so that both lenders and customers are protected alike.”
 

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